Investment fund for Black- and Latino-owned businesses gains support from BJC HealthCare
A new investment fund for minority-owned businesses in the St. Louis region is getting support from one of the largest employers in the area.
BJC HealthCare and WEPOWER Capital announced a collaboration Wednesday to support Black- and Latino-owned businesses.
The health care system’s funding, which was not specified, goes into the pilot fund managed by WEPOWER, a nonprofit working to build political and economic power in local communities of color.
“It very much aligns with our work, where we’re committed to improving and addressing the racial wage and wealth gap that we’re seeing in our region,” said Christopher Nolan, BJC’s director of anchor initiatives and community health improvement.
He explained this investment is an opportunity for his organization to affect health and well-being in the region by focusing beyond direct clinical care on things like economic and social health.
“We really want to start looking at what’s happening outside of our walls,” Nolan said. “You’re starting to see that with health care institutions, we’re looking at what’s happening in the day-to-day lives of folks, understanding there are other factors.”
WEPOWER Capital is a way to create generational wealth and other opportunities for historically underserved parts of the region, he said.
BJC’s contribution, along with others, brings the fund’s total to $1.5 million, and will be invested in high-growth Black- and Latino-businesses, said Yoni Blumberg, WEPOWER’s vice president of community wealth building.
The fund doesn’t function like most forms of investment, shedding the need for an entrepreneur to have a particular credit score or offer personal collateral, he said.
“We’ve seen those things have racially disparate impacts and also believe there are better ways to assess how risky an investment is,” Blumberg said. “The core way we’re making investments in companies is through an unconventional financial vehicle: a revenue-based investment.”
Instead of being for a set dollar amount each month, as with a usual bank loan, the payments are based on last month’s revenue, he said. This helps better share the investment risk between the fund and the business and creates incentive for WEPOWER to support the continued growth and success of the venture, Blumberg explained.
“It’s also different from venture capital because it doesn’t require an entrepreneur to give up large shares of ownership, like an equity investment would from a conventional venture capital firm,” he added.
All of this is designed to keep the autonomy of a Black or Latino entrepreneur intact and eventually have the venture stay with the community instead of going to a private equity firm, Blumberg said.
WEPOWER Capital will have an investment committee made up of entrepreneurs of color, local residents and people with more conventional finance and investment backgrounds to review potential ventures, he said.
“We’re trying to find good deals, good prospects and underwrite them, but then bring them to our investment committee,” Blumberg said. “That’s a step on the way to making investments more accountable to the community.”
He acknowledges it’s an unconventional approach and explains why the initial pilot investment fund is only $1.5 million at this point. The idea is to demonstrate small-scale success before growing it, which makes BJC’s support at this point substantial, Blumberg said.
“It’s really exciting to have them show interest and a desire to work together,” he said. “BJC is looking at how can they take their economic power and instead of shying away from it, taking a critical look at what they can do with that to advance community health outcomes in the region.”
Nolan shared a similar sentiment.
“We are focused on thinking about how our investments can have an impact locally,” he said. “BJC is not going to pick up and move to another state. We’re anchored in our community.”
Eric Schmid covers economic development for St. Louis Public Radio